In one of this week’s TechMarketView updates, IT analyst Richard Holway predicted that we have hit the low-point in a ‘U’-shaped economy – but that we’re in for a long bottom and that when we return to growth (sometime in 2010), the market will be very different.  According to Holway, “Just surviving through to the 2010 up-tick is not enough.”  Holway has stressed the importance of preparing for the upswing and not crippling the business by adopting cost-cutting strategies that might weaken the IT department.

A recent research note from the Hackett Group underscores the importance of making long-term strategic investments during the downturn, while balancing them with short-term cost-efficiencies:

Given that most companies have sharply cut costs, there is an immediate need to realign the IT investment portfolio, understand how to define IT investment categories… and set goals for allocation by investment category.  Achieving these goals will require the development of an IT portfolio management capability comprising the processes, skill and supporting tools.

Hackett recommends allocating 60% of IT budgets to innovation and improvement, but Michael Krigsman of IT Project Failures, thinks organisations should not adopt a “cookie cutter” approach – instead, portfolios should be optimised on a company-by-company basis as a function of business strategy, technical requirements, investment capability and the features of the competitive landscape.

So, what can IT suppliers be doing now?  As the downturn has become a recession over the past 18 months, CIO.com has posted more and more articles to help CIOs demonstrate their value to the business, culminating in their article last August, ‘7 Tips to Make Your Business More Competitive’, which highlights streamlining costs without sacrificing long-term capability.

As CIOs begin to plan for the impending upturn, you can position yourself as an advisor and guide through the economic bottom and eventual upturn.  In my post, “CIO SOS: Help me influence the business“, I point out the benefits of working with a CIO, rather than just selling to them – for every IT supplier bypassing IT and trying to build a case with the business, there’s an IT department that wants to do exactly the same thing.

Another thing to try is provocation selling – identify a high-impact issue, develop an original point of view, lodge your provocation, prove your point.  CIOs are focusing on defending their value to the business, so take the time to understand what’s getting under your prospect’s skin.  (You can read what one CIO looks for in marketing direct at him in my interview with Tom Ilube.)